If an organisation has more interest-sensitive liabilities than assets,a _______ in interest rates will _______ the organisation's profits.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; not affect

Question

Quizplus · Accepted Answer

If an organization has more interest-sensitive liabilities than assets, a rise in interest rates will increase the cost of borrowing and decrease profits. This is because the organization will have to pay more in interest on its liabilities but will not necessarily receive more interest on its assets.

If an Organisation Has More Interest-Sensitive Liabilities Than Assets,a _______